Plastiblends India - Merging Ideas And Surging Ahead

Plastiblends India Limited is India’s largest manufacturer and exporter of Colour & Additive Master Batches and Thermoplastic Compounds for the Plastic Processing Industry.
Masterbatch is a solid or liquid additive for plastic used for coloring plastics (color masterbatch) or imparting other properties to plastics (additive masterbatch)

Plastiblends is headquartered in Mumbai. The company's world class manufacturing facilities are located at Daman, Gujarat & Roorkee, Uttarakhand with an annual manufacturing capacity over 75,000 MT. The company produces masterbatches for Polyolefins including BOPP, PET, PBT, ABS, HIPS & EVA.

The company exports to more than 40 countries worldwide and have a strong foot hold in the global market.
The company's production capacity has grown more than 10 times since the year 2000.

Serving Markets:
1) Agriculture
2) Household Appliances
3) Automation & Transportation Industry
4) Electrical, Electronics & Telecommunication
5) Healthcare & Pharma
6) Packaging
7) Textiles
8) Wire & Cables

The Masterbatch market in India is expected to grow at a CAGR of 23% till 2018, which means, the good performers in the sector have plenty of scope to improve their growth.
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The company is looking to double its capacity by 2015. Along with some nominal expansions that will take place at its existing plants that are situated in Daman and Roorkee, the company is looking forward to set up a new manufacturing unit.
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Speaking of numbers, the company has been growing steadily over the years, and this year, has not been an exception. The company has grown with a CAGR of 20% in sales, from 2009 to 2013. The profits growth has been varying because of instability of production cost over the past few years. The situation is getting better off-late.
For the first nine-months ended Dec'13, the company has shown,
Sales growth of 16% and Net Profit growth of 84%.
The company has consistently paid good dividend, and is expected to continue the trend.

My Views:
Again historically, March quarters have been good for the company, and considering a moderate growth of 16% again for this quarter, the company should post a total sales of 132 Cr, which will take their annual sales to 475 Cr, from 408 Cr last year. We might see a big jump in net profit for the full year, where I am expecting the company to end the year, with net profit figure of 26 Cr Vs 15 Cr posted last year. That will take their full year EPS to 20. Taking that figure into mind, the company is trading at a P/E multiple of 6 as against industry P/E of 22. Historically, if you see, the stock has never traded above P/E multiple of 8. So, even if we consider the P/E of 8, then stock should be around 160 levels.
Important thing to note here is that, since Aug'13, the stock has already jumped more than 100%, hence one can expect sub-dued stock performance for some time, or even mild downside, we don't know, but again, taking all above factors into consideration, stock is looking very good for long term right now.

Note:
As we all know, General Election 2014 is about to commence from 7th April, and results are expected to be announced on 16th May. The outcome of elections may have hazardous impact on stock markets, if results don't turn out to be favorable. So, if you are a very safe player, its better advised to enter post result declaration, in any of the recent stocks discussed here. If you have some risk appetite, you can invest in these testing times, and wait for things to settle down after elections, if something favorable doesn't happen.
All the best!!!!